Did you know only 30% of family-owned businesses make it through to the second generation? This somewhat sobering statistic sheds light on the challenges of maintaining a successful family business. Through years of research and working closely with family-owned businesses we have identified five areas that capture the focus of successful and long-lasting family enterprises. Are you giving sufficient attention to each?
Personal health and wellbeing
It is important that each family member looks after their own physical and mental health. When family businesses are heavily controlled by one person, if that person suddenly falls ill it can turn operations upside down. To contribute to family enterprises in a meaningful way each member who participates needs to care for their own health, including nutrition and fitness.
A healthy family unit
To ensure generational continuity and enterprise longevity, as well as a strong family governance it’s crucial for all the family members to have healthy relationships with each other. Family members should establish a clear family vision, articulating what they would like to achieve together as well as understand the family legacy and values.
Healthy family enterprise ownership
It is important to have strong ownership governance, discipline, and an open and collaborative exchange amongthe owners. Healthy ownership means a clear ownership vision and strategy for the organization that considers the family’s values as well as the business needs and priorities. Owners come to act as stewards to the business, its employees and its customers.
Running a high-performing business requires disciplined leadership and management and world-class governance on all levels – ownership, board, and top management. It is essential that these different levels know exactly what it is they are supposed to do vis-à-vis the other levels. Having a clear definition of the roles and responsibilities of owners, board members, and the top management team is paramount to ensure long-term success. Other essential factors include, but are not limited to, strategic foresight, innovativeness and financial excellence, as well as a strong talent management and succession planning – both family and non-family talents.
Societal and environmental impact
A growing number of today’s enterprising families want to leverage their assets as a force for good. Leaders are finally focusing on doing less harm and doing better through activities like advocacy, impact investing, corporate social responsibility, sustainable development goals, and philanthropy. A good balance between these separate layers is just as important to help the family enterprise system flourish across generations as good leadership at the top.
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